When you struggle with debt, your biggest worry is often how your financial choices will impact your family. Married couples in Maryland often share a home, expenses and future goals. Naturally, you might fear that fixing your own credit score through bankruptcy will drag your partner’s score down with it.
The short answer is usually no. When you file for bankruptcy individually, it typically only affects your specific credit report. However, it is important to understand how different types of debt work to ensure your spouse remains protected.
Individual versus joint accounts
In Maryland, your debts are generally considered yours alone unless your spouse also signed the contract. This means if you file for Chapter 7 or Chapter 13 bankruptcy, the negative mark goes on your credit report, not your spouse’s report. Their credit score should remain untouched if they are not listed on your accounts.
However, there are exceptions regarding co-signed debts. If you and your spouse hold a joint credit card or a car loan together, the creditor can still go after the co-signer for the full balance.
Protecting the nonfiling spouse
If you have joint debts, bankruptcy can become complicated. The standard court order that stops creditors from collecting from you might not stop them from calling your spouse. The rules depend on which chapter you file.
Consider these factors regarding shared obligations:
- Co-debtor stay: Chapter 13 bankruptcy includes a specific legal hold that stops creditors from collecting shared consumer debts from your spouse, a protection that Chapter 7 generally does not offer.
- Joint assets: Owning a home together as a married couple offers protection against individual debts, but creditors may still pursue the property for shared obligations.
- Authorized users: Your partner is not liable for the debt, but the account history may appear on their credit report unless you remove them.
Bankruptcy filings are public records. Credit reporting agencies use the filer’s Social Security number to identify and index the record, ensuring it typically appears only on the filer’s credit report.
Navigating financial waters together
Navigating these financial waters requires a clear view of which debts are yours and which belong to the marriage. A strategic approach allows you to address insolvency while keeping the financial health of your partner intact.
